Passive Income Challenge Day 18.
One way to earn more passive income is to invest money. You can invest in other businesses, real estate, stocks, and bonds. Each has its own risks and rewards. But, when you work for yourself, saving for retirement isn’t as easy as having a corporate payroll to withdraw each month with matching funds. Instead, it’s all on you. Regardless of what type of other passive income you invest in, you should choose some of these to get involved in as well.
Even though real estate is volatile, if you invest in individual rental properties, single-family dwellings, you can do quite well. When you have rental properties, someone else pays the mortgage but when the market is high you can “cash-out” and get a nice gain in your investment which can be as low as zero dollars and as high as 20 percent of the value of the property.
You can invest in the stock market in many ways, including getting a broker and buying individual stocks that you want. Often this costs a lot to enter the market but there are also less expensive funds called DRIPS that let you start for as little as 50 dollars a month.
Every bank has the option of opening a savings account. Often the interest rate is quite low but there is little to no risk with this type of savings. It’s a good idea to use this type of savings accounts for short-term saving. For example, if you know you want to buy a house in 5 years, you can set up a savings account to keep these funds safely.
Individual Retirement Accounts
Many IRAs are set up so that you can invest small amounts each month into the account. Often, you’ll choose a fund named after the year you want to retire and then it’s completely managed for you. For example, it might be called the 2048 fund. This means you’re expecting to retire in 2048 and start taking the money. In this way, the fund automatically adjusts your risk based on this information.
If you have children or grandchildren who may want to go to college later, you can invest in a Registered Education Savings Plan or, if you are in the U.S., your state’s 529 funds. These are safe investments and if the child doesn’t choose to go to school, the money can be accessed for other reasons later or transferred to other family members such as your child’s child.
Small Business Investing
Today crowdfunding is a very popular way for people to get money for their idea, but it’s also an opportunity for you to invest. You can invest in startups using a platform like Kickstarter.com or Indiegogo.com. Remember when you invest, you can lose your investment. But, with the high risk, you may get a huge reward.
The biggest thing to learn about investing is that nothing is a sure thing. Not even CPP or social security can be counted on today. But, more than likely if you start small, and only invest what you can afford to lose, in 20 years the effort will pay off in a big way for you. On average, most people come out ahead if they are smart, make educated decisions, and focus on the long-term instead of the short term.
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Don’t Overlook Investment Opportunities
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